The
processing of the 200 tonne commercial scale trial collected from the
Marianas Magnetite Tailings Project has been finalised, and it is
estimated from initial analyses that the recovered ore material grades
60-63% iron.

With this occuring, projected cash flows from treatment of Marianas ore can be used as security to tap European capital markets for debt funding.

Marianas is set to produce magnetite concentrate at very low cost with minimal CAPEX and low OPEX.

Now that the sample has proven the
viability of the tailings, and the ability to produce high grade
concentrate at a commercial scale, Condor Blanco will now pursue the
long-awaited definitive agreement.

Once the final joint venture agreement is signed and final permitting completed, large scale operations will begin.

Dr
Paul Crosio, Chairman of Condor, was present for 200t trial, and
commented: “The material is even better than expected with no material
handling problems experienced and dryness being even better than
imagined.

"The dryness makes the tailings very easy to process
through the preferred magnetic separation method. Dryness is a key
operating parameter for us, and this is at the extreme of the scale.”

The Marianas Magnetite Tailings Project
covers the mining and upgrading of a known supply of magnetite and
hematite tailings located just outside the mining city of Copiapo.

Condor Blanco holds 50% of the project and has the right to acquire 100% of this project prior to June 30, 2014.

Laboratory analysis underway

A full laboratory analysis is underway to confirm the overall grade of the final concentrate and other chemical impurities.

Processing
of the 200 tonne sample confirmed a 12% recovery as estimated from past
laboratory testing and used in the previously completed scoping study.

On
the basis of the results of the sample, Condor has given notice of its
intention to complete the definitive joint venture agreement with
Lacerta Finance and Mining Spa.

Heads of Agreement for Debt Financing

Condor
has also applied for debt financing of up to €10 million. This is to be
borrowed from a European financial institution, with bank bonds of the
same face value being provided as security to the financial lender.

These bonds have in turn been securitised against the upcoming cash flows of the Marianas Iron Ore Project

The
funds earmarked for Marianas either solely or as a joint venture under
the Heads of Agreement already signed with Lacerta Finance and Mining
Spa to treat iron ore tailings.

The funds may also be used for Condor's commitment to the drilling program for The Duel Joint Venture.

The
advantage of Marianas is that projected cash flows can be used as
security to tap European and international capital markets for debt
funding.

Marianas is able to produce magnetite concentrate at very low cost with minimal CAPEX.

Definitive agreement

The definitive agreement will be subject to final permitting for the commencement of production.

As
previously announced, under the terms of the HOA mining would commence
processing 60,000t/month and within three months of permitting,
100,000t/month to be reached before the expiry of one year.

Under
the HOA terms, Lacerta will relocate its recently purchased magnetite
plant and all necessary mining equipment (including trucks, excavators
and dozers) to Marianas on receipt of final mine permits.

"Processing was smooth and no operational issues were
reported. A detailed analysis of the final concentrated ore is being
performed by an independent testing laboratory and will be released this
week.”

Analysis

Condo Blanco is now
in a position to pursue the long-awaited definitive agreement following
proving the viability of the tailings at Marianas - and the ability to
produce high grade concentrate on a commercial scale.

Mining would likely commence processing
60,000t/month and within three months of permitting, lifting to
100,000t/month before the expiry of one year which is where the debt
funding will come in handy.

This places the company on the path
to generate cash flows, which can then be used as security to tap its
European institution for debt funding to ramp up Marianas.

A
defining feature for Marianas is that it can produce magnetite
concentrate at very low cost with minimal CAPEX, low OPEX and on
Proactive Investors estimates - a high IRR and quick payback.

Condor's announcement of the acquisition
of a South African coal development project named the “The Duel” Hard
Coking Coal Project in South Africa also provides near term price
catalysts.

Some of the debt funds can potentially be used for the acquisition of this project.

With all this upcoming activity and
catalysts, Condor is still only capped at circa $2.4 million (undiluted)
which seems out of "sync" with 6 month potential valuation.